China is ahead on high-speed rail! Oh, wait...
By Malcolm Moore
21 Feb 2012
Out of 23 current railway projects, some 70 per cent have been suspended, partly suspended, or delayed, according to the Chinese state media. Meanwhile, an unnamed source told Dow Jones, the news agency, that only nine new railways would be commissioned this year, compared to 70 last year.
Having run up enormous debts, the Chinese Railways ministry is struggling to persuade banks to continue to finance its ambitions. Ticket sales, meanwhile, have been slow on some lines as travellers balk at the price.
"The ministry cannot bear so much debt. It has already taken 240 billion yuan (£24 billion) of loans and if it takes much more how can it pay the interest?" said Wang Mengshu, a member of the Chinese Academy of Engineering and senior consultant on the high-speed rail project.
"It can make profits of about 70 billion yuan on freight, but it is making no money on passenger travel. The government should cancel some of the debt, or invest some money itself rather than asking the banks to finance it," he added. "A lot of projects are half-finished and while nine new lines have been approved this year, no one has started building them."
By the end of this year, China's high-speed network is likely to stretch to over 6,000 miles, transporting hundreds of millions of passengers in spacious long-nosed bullet trains. The 819-mile journey from Beijing to Shanghai, more than twice the distance from London to Edinburgh, now takes under five hours...
However, China's high-speed rail ambitions, which include tendering for the London to Birmingham high-speed link, took a blow last July when two trains collided, killing 40 and injuring almost 200. A few months before the crash, China's Railway minister, Liu Zhijun was removed from his post and now faces corruption charges. Zhang Shuguang, the deputy chief engineer, who is also under investigation, reportedly paid £540,000 for a house in Los Angeles while on a monthly salary of a few hundred pounds.
Questions were raised about how much of the £190 billion high-speed rail budget had been siphoned off, and whether it would have an impact on the safety of the network. In the wake of the crash, the Ministry found it increasingly expensive to borrow money, and no longer had access to the huge stimulus loans that were handed out in the wake of the financial crisis to keep the Chinese economy going.
"The Ministry's debts are now worth 60 per cent of its assets, and some analysts think they may rise to 70 per cent this year," reported the China Business Times.
Labels: High-Speed Rail